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Ministers warned of prolonged problems for the country’s biggest energy users on Tuesday, admitting that the UK’s main gas storage hub would be out of action until at least May.
In a sign of the seriousness with which the government is treating Monday’s record rise in wholesale gas prices, Alan Johnson, trade and industry secretary, called in Sir Roy Gardner, chief executive of Centrica, parent company of British Gas, to discuss ways of avoiding a crisis.
After the National Grid issued an unprecedented warning this week to big electricity users that it might have to ration power supplies, Mr Johnson told MPs in a Commons statement that he was not expecting an emergency. The warning was lifted on Tuesday.
But he called the combination of a fire at Centrica’s Rough gas storage platform and this week’s unseasonally cold temperatures “a series of events we could have done without”.
The meeting with Sir Roy was understood to have examined alternative ways of transporting stored gas to the mainland in the event of another accident.
The storage facility, which accounts for 80 per cent of the country’s storage capacity and can supply 10 per cent of average daily demand in winter, would “not be back in action for a couple of months”. The record surge in gas prices was a response to these unusual circumstances.
Mr Johnson warned that the vulnerability to sudden increases in prices and the difficulties facing industrial users would continue “this year and probably next year” and that “the days of cheap, indigenous fuel are probably gone forever”.
In Northumberland, the Vald Birn foundry, which makes motor and engineering castings, said that it would close at the end of April, making 157 workers redundant. Its electricity bill had doubled to £2.4m.
Mel Speirs, the plant’s managing director, said it had been unable to pass on the cost increases to customers. “The Danish owners said enough is enough.”
A circuit-board plant owned by Circatex, in South Shields, is to close on Friday after a 60 per cent rise in its electricity costs. Meanwhile the William Cook Cast Products plant at Stanhope in Weardale, County Durham, has adjusted its shift patterns, turning to operating at off-peak energy times, using night-shifts to minimise the impact of hugely increased energy costs.